Sales promotion is regulated in Germany by the Act Against Unfair Competition.
Unfair sales promotion commercial practices are illegal if they are suited to tangible impairment of the interests of competitors, consumers or other market participants.
Unfairness applies to sales promotion in particular where a person:
- does not clearly and unambiguously state the conditions for participation in a promotional contest or game of an advertising nature;
- makes consumer participation in a promotional contest or game dependent on the purchase of goods or the use of a service, unless the promotional contest or game is inherently tied to the goods or service concerned.
A commercial practice is deemed to be misleading, and hence illegal, if it contains untruthful information or other information suited to deception regarding the reason for purchase such as the existence of a specific price advantage, the price or the manner in which the price is calculated, or the conditions on which the goods are supplied or the services provided.
It is also presumed to be misleading to advertise with a price reduction in a case where the price concerned has been demanded for only an incommensurably short period of time.
Sales promotion commercial practices that are considered in all circumstances illegal are:
- Bait advertising: making an invitation to purchase goods or services at a specified price when the entrepreneur does not disclose that he has reasonable grounds for believing that he will not be able to supply these, or equivalent, goods or services, or procure such supply, at such specified price for a period that is, and in quantities that are, reasonable.
- In the case of special offers: making the false statement that certain goods or services will only be available generally or on particular terms for a very limited time, in order to elicit an immediate transactional decision from the consumer without the latter having the time and the opportunity to make an information-based decision;
- In the case of competition or prize promotion: offering a competition or a promotional contest without awarding the prospective prizes or a reasonable equivalent.
- In the case of free products: offering goods or services as being “gratis”, “free”, “without charge”, or using a similar expression, if the consumer has to pay other cost than the unavoidable cost of responding to the offer of goods or services or of collecting or paying for delivery of the goods or of using the services.
- In the case of prize competition: making the false statement, or creating the false impression, that the consumer has already won, or will win, a prize, or that he will obtain another benefit although such prize or benefit in fact does not exist, or that in any event the possibility of obtaining a prize or other benefit is subject to the consumer paying money or incurring a cost;
- In the case of sales promotional scheme: establishing, operating or promoting a sales promotional scheme creating the impression that compensation can be obtained solely or primarily from introducing other participants into the scheme (scheme with a snowball effect or pyramidal structure).